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  • FIRST POST
    • qwertyty
    • By qwertyty 15th Jun 17, 11:40 PM
    • 43Posts
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    qwertyty
    Selling rental property and income tax
    • #1
    • 15th Jun 17, 11:40 PM
    Selling rental property and income tax 15th Jun 17 at 11:40 PM
    Hi,

    I just need a bit of advice which I hope someone can provide.

    I have a flat that I rent to a friend, which I have done for the last 13 years. The rent that I am paid is well the below market value and has been the same ever since my friend moved in and I have been paying income tax based on the rent I receive, I am now thinking of selling the flat.

    What I would like to know once the house is sold, do I have to re-declare my income and tax to the taxman for every single year I have been a landlord. I have read that as the rent is below market value, that I will have to pay income tax based on the market value not the rent I received.

    Thanks
Page 1
    • 00ec25
    • By 00ec25 16th Jun 17, 12:26 AM
    • 4,756 Posts
    • 4,122 Thanks
    00ec25
    • #2
    • 16th Jun 17, 12:26 AM
    • #2
    • 16th Jun 17, 12:26 AM
    the rule re below market rent ("uncommercial rent") controls how much of the actual costs you incurred can be offset against your income to arrive at your net taxable profit.

    if you have been claiming more costs than rent, and patently therefore a loss, then, and only then, would an adjustment be required. The adjustment has nothing whatsoever to do with you selling, it would "simply" be you coming clean over the fact that you have committed tax fraud to date by claiming losses you are not entitled to.

    https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2220

    https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2010

    if you have in fact declared a profit to date and been taxed accordingly then no adjustment is required since HMRC are not in the least bit interested in the business "stupidity" of landlords who undertake non commercial letting, as long as they pay some tax
    Last edited by 00ec25; 16-06-2017 at 12:36 AM.
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